CSR spend in FY15: Majority fails to do the minimum

Data on CSR spend for financial year 2014-15 shows that more than half of the India Inc firms have failed to meet their targets for the period.

NEW DELHI: It has reported that While 194 firms spent the prescribed amount or more during the year, data shows that there were a total of 266 non-compliant companies and they accounted for an aggregate unspent amount of Rs 2,444 crore.

The Companies Act, 2013, makes it mandatory for listed and unlisted organisations of a certain size and net worth to spend at least 2 per cent of their average net profit towards corporate social responsibility (CSR), but more than half of the 460 firms that filed their annual reports on CSR as of January 31, 2016, failed to spend the prescribed amount for 2014-15. ONGC, NTPC, TCS and Bharti Airtel are some of the big companies that failed to meet their social obligation. Indian arms of large multinationals such as Apple India, Pfizer and Nestle India also failed to spend even half the prescribed fund.

According to the Act, a firm with net worth of at least Rs 500 crore with minimum turnover of Rs 1,000 crore or a net profit of Rs 5 crore or more has to spend 2 per cent of their average net profit (clocked in the last three years) on CSR.

According to Ministry of Corporate Affairs data provided in response to an RTI filed by Rakesh Reddy Dubbudu of Factly, a public information portal, a total of 460 companies that filed their annual report on CSR, spent an aggregate of Rs 6,337 crore in 2014-15 as against the prescribed spending of Rs 8,347 crore, thereby falling short by Rs 2,010 crore on an aggregate basis. Aggregate for 460 companies includes the amount overspent by a few companies.

While 194 firms spent the prescribed amount or more during the year, data shows that there were a total of 266 non-compliant companies and they accounted for an aggregate unspent amount of Rs 2,444 crore.

A closer look reveals that the government-owned entities have lagged significantly in meeting their prescribed expenditure vis-à-vis their private sector counterparts. While a handful of 32 PSUs accounted for an unspent amount of Rs 1,075 crore with an average of Rs 33.5 crore per PSU that was unspent, within the private sector, a total of 219 companies accounted for an unspent amount of Rs 1,288 crore at an average of Rs 5.9 crore per organisation.

ONGC topped the list with a total unspent amount of Rs 165 core during the year. The oil major spent a total of Rs 495 crore towards CSR as against the prescribed Rs 660 crore.

Within the private sector, Bharti Airtel had the largest unspent amount as it could only spent a total of Rs 41 crore as against the prescribed Rs 140 crore, falling short by Rs 99 crore.Listing out the reason for the unspent amount, ONGC in its annual report said that it could not spend the allocated amount for the year as most of the projects undertaken were in transition phase. It maintained that some of the flagship projects undertaken were of long gestation periods with the budget spread over 3-5 years.

Listing out the reason for the unspent amount, ONGC in its annual report said that it could not spend the allocated amount for the year as most of the projects undertaken were in transition phase. It maintained that some of the flagship projects undertaken were of long gestation periods with the budget spread over 3-5 years.

Bharti Airtel in its annual report said that since it was the first year of compliance, the company was in the process of evaluating the focus areas / locations of intervention for CSR activities.Most companies that failed to comply with the requirement cited reasons such as: the delay caused due to the first year of implementation; suitable project not found and suitable implementing agency not found.

Most companies that failed to comply with the requirement cited reasons such as: the delay caused due to the first year of implementation; suitable project not found and suitable implementing agency not found.

In fact, the Schedule VII of the Companies Act lists out a set of activities that firms can include within their CSR activity. These include promoting education, eradicating hunger, poverty, malnutrition, protection of national heritage, project on rural development and ensuring environmental sustainability etc. They can also contribute to the Prime Minister’s National Relief Fund or any other fund set up by the Central government for socio-economic development. A look into the 266 companies that did not meet the compliance requirement on CSR expenditure shows that while 34 firms did not spend any amount on CSR, 170 spent less than half their prescribed amount.

A look into the 266 companies that did not meet the compliance requirement on CSR expenditure shows that while 34 firms did not spend any amount on CSR, 170 spent less than half their prescribed amount.It is not just the Indian public and private sector companies that lagged in fulfilling their responsibilities towards the social.

It is not just the Indian public and private sector companies that lagged in fulfilling their responsibilities towards the social sector, several large multinational firms operating in India also failed on that front. While Monsanto India, which is in the agriculture business, did not spend any money out of its prescribed Rs 1.8 crore towards CSR in 2014-15, other Indian arms of global business giants such as Apple India, Pfizer Ltd, BMW India and Nestle India, among others, failed to spend even half their prescribed CSR spend for the year.

While Monsanto India, which is in the agriculture business, did not spend any money out of its prescribed Rs 1.8 crore towards CSR in 2014-15, other Indian arms of global business giants such as Apple India, Pfizer Ltd, BMW India and Nestle India, among others, failed to spend even half their prescribed CSR spend for the year.Among the 266 companies that failed.

Among the 266 companies that failed to meet the requirements of the Companies Act, the unspent amount as a percentage of the prescribed CSR is highest for multinationals.

While 15 of them stood non-compliant, they spent an aggregate of only Rs 34 crore as against the prescribed spent of Rs 115 crore. More than 70 per cent of the CSR money was unspent for these companies.Against this the unspent CSR component for public sector and private companies stood at 40 per cent and 46 per cent, respectively.

Against this the unspent CSR component for public sector and private companies stood at 40 per cent and 46 per cent, respectively.

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